How Are Acceptable Audit Risk and Acceptable Detection Risk Related

question 29

Essay

How are acceptable audit risk and acceptable detection risk related?
Acceptable audit risk is the level of audit risk the auditor is willing to accept. Similarly, while detection risk is a risk the auditor wants to avoid, acceptable detection risk is the level of detection risk the auditor is willing to accept. How does the level of acceptable audit risk or the level of acceptable detection risk affect the audit? If, for example, the level of audit risk the auditor is willing to accept increases, this increase generally acts to decrease the nature, timing, and extent of testing the auditor performs. The same is true for an increase in acceptable detection risk.

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Definitions:

Industrial Unions

Labor unions that represent all workers, regardless of job or skill level, within an entire industry.

Local Unions

Regional branches of labor unions that represent workers' interests in specific geographic areas.

International Unions

Organizations that represent workers' interests across multiple countries.

National Unions

Labor organizations that represent workers from across the country in a specific trade or profession.